Sharif University of Technology Session #2ie.sharif.edu/~fvalilai/resources/ERP/2015F/02 ERP.pdf · The normal policy in purchasing was to keep a little of everything on order all

Advanced Manufacturing Laboratory

Department of Industrial Engineering

Sharif University of Technology

Session #2

Instructor

Omid Fatahi Valilai, Ph.D. Industrial Engineering Department, Sharif University of Technology

Email: [email protected] , Tel: 6616-5706

Website: Sharif.edu/~fvalilai

Class time

Sunday-Tuesday 16:30-18:30

Wednesday 09:00-12:00

Course evaluation

Mid-term (30%)

Final exam (40%)

Quiz (5%)

Exercise (10%)

ERP Lab (15%)

Advanced Manufacturing Laboratory, Department of Industrial Engineering, Sharif University of Technology

ERP (21-550), Session #2

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Mid-term session:

Sunday : 8th Azar 1394, 16:30 ~ 18:00

Final Exam:

Sunday: 27th Dey 1394, 09:00 ~ 10:30

Reference:

Shtub, A., “Enterprise Resource Planning (ERP)- The dynamics of

operations management”, 2002, Kluwer Academic Publishers

Ptak, Carol A., “ERP Tools, Techniques, and Applications for

Integrating the Supply Chain”, 2004, The CRC Press

Fui, F., Nah, H., “Enterprise Resource Planning”, 2002, IRM Press



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Mid-term session:

Sunday : 8th Azar 1394, 16:30 ~ 18:00

Final Exam:

Sunday: 27th Dey 1394, 09:00 ~ 10:30

Reference:

Daniel E. O’leary, “Enterprise Resource Planning Systems Systems, Life

Cycle, Electronic Commerce, and Risk”, 2000, Cambridge University

Press



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Contents:

Enterprise Management

Operations Management

The Evolution of ERP Systems: A Historical

Organizations and organizational structures

Scheduling

Purchasing and inventory management

Marketing considerations

ERP selection and implementation



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Contents: Enterprise Management

History of Enterprise Resource Planning

The Theory of Constraints and ERP

Sales and Operations Planning

Buffer Resource Strategy

Enterprise Resource Management

Integrating the Supply Chain to Reap the Rewards

Strategic Sourcing and Procurement



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Contents:

Enterprise Management


Just some times ago:

Simple manual approaches such as order point were effective in managing inventory.

Companies could afford to keep inventory on hand to satisfy customer demand.

Labor was the main driver of product cost.

The focus was based on longer product life cycles and less product variety.

The normal policy in purchasing was to keep a little of everything on order all the time just to make

sure that it never ran out.

The assumption was that the customer would continue to order what they had before and the future

would look very much like the past.



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Contents:


Just some times ago:

Product life cycles were measured in years.

If a little extra was ordered, it was not a big issue since it could be used up before it became obsolete.

Inventory was an asset not only on the balance sheet, but also in the mind of the average manufacturing

manager.

Warehouses, automated storage/retrieval systems, and carousel systems were designed, developed, and

installed to manage, sort, and retrieve inventory.

The techniques of the day focused on the most efficient manner of managing large volumes of inventory.



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Contents:


Material Requirement Planning:

The need to order only what was really needed crept in on the horizon.

No longer could a company afford to order some of everything and keep a little of everything on hand.

Orders had to be based on what was being sold.

Excess and obsolete inventory became a real problem.



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Contents:




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Contents:



For the first time, based on a schedule of what was going to be produced and supported by a list of

materials that were needed for finished item, the computer could calculate the total need and compare it

to what was already on hand or committed to arrive.

This comparison could suggest an activity to place an order, cancel orders that were already placed, or

simply move the timing of these existing orders.

MRP calculates what do I need, compares it to what do I have and calculates what do I need to go get and

when.”



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Contents:



For the first time the material planning function could answer the question of when. Rather than being

reactive and waiting until the shortage occurred.

The planner could be proactive and time phase orders, including releasing orders with multiple deliveries.

These larger orders with multiple delivery dates typically can provide a significant cost advantage for the

company because of favorable vendor pricing.



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MRP netting

Department of Industrial Engineering, Sharif University of Technology

ERP ( Enterprise Resource Planning), Session #2

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Contents:



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Contents:



Some simplifying assumptions

One of these assumptions was that orders should be started at the last possible date to provide for

minimal inventory while still serving the customer’s need on time. (backward scheduling)

All orders were scheduled backwards from the desired completion date to calculate the required start

date.

In project management language, all operations were placed on the critical path.

Earliest date the operation could start was the same as the latest date the operation could start.

There was no slack time in the schedule.



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Contents:



Companies were able to gain control over their material purchases and order only what was needed

and when.

Productivity and quality significantly improved in the companies.

The inventory asset was significantly reduced and cash flow dramatically improved as a result.

This provided a tremendous competitive advantage to those companies effectively using these new tools.



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Contents:



Closing the MRP loop



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Closed-loop MRP



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MRP II



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Documents

Sharif University of Technology Session #2ie.sharif.edu/~fvalilai/resources/ERP/2015F/02 ERP.pdf · The normal policy in purchasing was to keep a little of everything on order all